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The business secretary has said that US company Kraft has given assurances about the future of Cadbury.
Today the British confectioner, makers of the famous Creme Egg, agreed to a takeover offer from Kraft valued at $19 billion (£11.5bn).
Lord Mandelson, appearing before the Commons business select committee, told MPs that he had just received a letter on his BlackBerry from the chief executive of Kraft.
She expressed her "sincere respect" for Cadbury's heritage and her confidence that the merger is good news for both companies.
The business secretary said Kraft had made a series of assurances to Cadbury shareholders and the American company would face "very close scrutiny" to ensure those are met.
However, Lord Mandelson made clear that it is "not his place to say which mergers or takeovers should take place," except in cases of national security and to ensure broadcast diversity.
"As a minister, I have to reflect that in our country Cadbury's is an iconic brand with a strong community presence," he said.
He said he cannot block or stop the takeover.
Lord Mandelson said his responsibility as secretary of state is to watch out for the long-term interests of Cadbury's workers and shareholders and keep Kraft to their undertakings.
Directors can expect "hard-nosed scrutiny" and very heavy criticism from the government if they do not meet their commitments.
However, he said he is "unconvinced" of the need for more extensive government powers to control takeovers on broad-based public interest grounds.
Lord Mandelson warned that government intervention could be exposed to political lobbying or populist sentiment and a loss of 'predictability' in mergers or takeovers could harm the UK market.
"If we start to restrict ownership, we could be restricted by other countries," he said.
Julie Kirkbride (Con, Bromsgrove) pointed out that a US company buying a UK company and then cutting jobs is in itself political.
Lord Mandelson said that US workers would argue the same with a UK takeover and in fact a minority of Cadbury's staff are employed in Britain.
Asked if Kraft has given an undertaking to keep the Cadbury name, the business secretary replied that the Americans would not do anything as stupid as ditch such a valuable brand.
Lindsay Hoyle (Lab, Chorley) pointed out that Terry's Chocolate Orange is now made in Poland and not York, and asked if Lord Mandelson would be happy with a Polish-made Creme Egg.
"I would like my Creme Egg to continue to be British," the famously health-conscious peer replied.
"That is my taste and my prejudice," he added, rather than an exercise of his powers as secretary of state.
Roger Berry (Lab, Kingswood) said most other countries put "a bit of grit in the system" to discourage hostile foreign takeovers.
"One person's grit is another person's protectionism," Lord Mandelson replied.
He said the government would continue its dialogue with shareholders about whether the current legal framework is performing but pointed out that "one false move" could harm the market.
Lord Mandelson added that company directors and shareholders have a responsibility to ensure the long-term interest of the business.
He said a code of stewardship has been developed as a result of consultation with shareholders and will be published in the near future.
Dods Parliamentary Communications Ltd